Slovenia to end stimulus measures in 2011

02 Oct, 2009

Slovenia is likely to start dismantling measures introduced to ease the effects of the global crisis in 2011, providing its economic growth in that year is above 1 percent, Finance Minister France Krizanic said.
"We have a plan and a method, and a complete (exit) strategy that can be implemented if there would be economic growth that would be larger than just one percentage point on an annual level," he told Reuters in an interview on Thursday on the sidelines of a meeting of European Union economic ministers.
According to the latest government forecast released on Wednesday, the country sees gross domestic product (GDP) growth of 0.9 percent in 2010 and 2.5 percent in 2011. "We are still holding the stimulus in 2009 and 2010. In 2011, we will start to withdraw the fiscal stimulus, especially in the labour market interventions," Krizanic said.
The Slovenian government will this year spend some 600 million euros ($874.2 million) on measures to counter the economic crisis, including subsidies for companies that introduced shorter labour hours or temporary lay-offs in exchange for avoiding additional job cuts.
The global crisis has left a deep impact on Slovenia, which was the fastest growing euro zone member over the last two years, because of dependency on exports. Its economy contracted 8.8 percent in the first half of 2009. As a consequence, the budget deficit is this year expected to soar to 5.9 percent of GDP from 1.8 percent in 2008.
Krizanic said he expected the deficit will be brought down to 3 percent, or the maximum level allowed for euro zone members, in 2012 "if there will be (economic) growth and if parliament increases tax rates". He also said tax revenues showed that Slovenia's economy was starting to recover in the third quarter of the year.
"The revenues (in the third quarter) are greater than last year, especially in value added tax," Krizanic said. Last week Krizanic said Slovenia's economy would shrink only 5 percent this year, although the government's macroeconomic institute sees a contraction of 7.3 percent and the Bank of Slovenia on Wednesday forecast a 6.7 percent contraction.

Read Comments